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17 June 2015

Wow, it's the sharing economy, everything is new and different. Hey, they don't have to pay the fees that those stupid old taxi companies do, because you order them on the Internet.

Sorry to be a bit negative early on a Monday morning, but I was just reading in the Washington Post that Uber is arguing that it should not have to pay the same fees as traditional taxi companies to pick people up at airports. Uber says the fees are too high.

I have no strong opinion about the size of these fees, which are effectively a tax on taxi travel that is used to support the operation of the airport. However, there is no basis for Uber paying lower fees than their competitors in traditional taxi companies, even if it is cooler.

So not surprised. Of course they want a government handout, because ……… Free Market.

The next day, Uber told its drivers to keep away from such protests. The Financial Times reports that Uber drivers in Hangzhou received a message imploring them: “Please don’t wreck the good urban environment you have all worked so hard to help build… If you are at the scene, leave immediately.”

More damningly, the message added that there would be consequences for those who didn’t follow instructions, and that Uber would track drivers’ GPS devices (i.e., personal phones) to make sure they comply. These measures, reports the WSJ, are intended to “maintain social order.” Not something you want to hear from an employer.

An Uber spokesperson in Beijing told Quartz that “we firmly oppose any form of gathering or protest, and we encourage a more rational form of communication for solving problems.”

In a ruling that fuels a long-simmering debate over some of Silicon Valley’s fastest-growing technology companies and the work they are creating, the California Labor Commissioner’s Office said that a driver for the ride-hailing service Uber should be classified as an employee, not an independent contractor.

The ruling ordered Uber to reimburse Barbara Ann Berwick $4,152.20 in expenses and other costs for the roughly eight weeks she worked as an Uber driver last year. While Uber has long positioned itself as merely an app that connects drivers and passengers — with no control over the hours its drivers work — the labor office cited many instances in which it said Uber acted more like an employer. Uber is appealing the decision.

The ruling does not apply beyond Ms. Berwick and could be altered if Uber’s appeal succeeds. Uber has also prevailed in at least five other states in keeping its definition of drivers as independent contractors. Yet the California ruling stands out because officials formally laid out their arguments for why Uber drivers are employees. That could bolster class-action lawsuits against the company in the state. California law expressly requires employers to reimburse employees for business expenses and several suits proceeding against Uber are based on that state law.

………

“For anybody who has to pay the bills and has a family, having no labor protections and no job security is at best a mixed blessing,” said Robert Reich, former secretary of labor and a professor of public policy at the University of California, Berkeley. “At worst, it is a nightmare. Obviously some workers prefer to be independent contractors — but mostly they take these jobs because they cannot find better ones.”

The California ruling, which was made June 3 and came to light after Uber filed an appeal Tuesday evening, noted that the company provided drivers with phones and had a policy of deactivating its app if drivers were inactive for 180 days.

“Defendants hold themselves out as nothing more than a neutral technological platform, designed simply to enable drivers and passengers to transact the business of transportation,” the Labor Commissioner’s Office wrote about Uber. “The reality, however, is that defendants are involved in every aspect of the operation.”

In a statement, Uber said the decision was “nonbinding and applies to a single driver.” The company said individual cases about worker classification in at least five other states, including Georgia, Pennsylvania and Texas, have resulted in rulings that categorize drivers as contractors.

………

Other Uber drivers may also be inspired to follow Ms. Berwick’s example, given that filing a claim with the California labor office is a relatively simple process.

Here is hoping that this sticks.

Uber is not about innovation, it is about regulatory arbitrage.

If they are allowed to ignore labor law, taxi regulations, licensing requirements, they are effectively being subsidized by the rest of us.